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The dollar falls after the Fed cut

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Forex News for North American Trading on Nov 3, 2021:

Markets:

  • Gold dropped $ 13 to $ 1774
  • US 10-year yields up 2.8bps to 1.57%
  • S&P 500 rises 30 points to 4660
  • WTI Crude Down $ 3.81 to $ 80.10
  • NZD leads, JPY lags

There were no surprises in the Fed’s phase-out plan, as they delivered the $ 15 billion they outlined in the FOMC minutes. On the hawks’ side, they gave themselves room to maneuver from the $ 15 billion pace, but on the moderate side, they maintained transitory language. At the press conference, Powell said they can be patient waiting for the bottlenecks to be cleared.

That final message tipped the market toward buying risk assets, which generally meant selling the US dollar. That makes sense.

EUR / USD rose to 1.1615 from 1.1580 while cable extended gains to 1.3985 from 1.3655. Commodity currencies added about a quarter of a cent against the dollar.

In general, those are small moves and that reflects a Fed that performed largely as expected.

The oil was sold before the OPEC meeting. Perhaps that reflects nerves, but it is also notable that Iran’s nuclear talks were scheduled. With the United States so concerned about high oil prices, idle Iranian capacity would be welcome on Biden’s agenda. Despite that, the loonie largely ignored the 5% crude drop and focused on Fed trading.

The USD / JPY fell from 113.80 to 114.20 on the Fed’s decision, as the sale of dollars met the risky markets in general. The pair is on track to end unchanged for the second day in a row.

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The dollar falls after the Fed cut

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